Employees’ Rights in Case of a Transfer of Undertaking
In conjunction with the transfer of a business from one employer to another, the rights and obligations under employment agreements and employment relationships that existed at the time of the transfer to the new employer shall also be transferred. Where an employee’s employment agreement and the employment relationship have been transferred to a new employer the new employer shall be obligated, for a period of one year from the date of the transfer, to apply the employment terms and conditions of the collective agreement which the previous employer was bound to. The terms and conditions shall be applied in the same manner in which the previous employer was obligated to apply them. Prior to the decision to transfer the business (or a part of it), the acquiring company, as well as the transferring company, must, as a rule, call for and conduct union consultations with the local union representatives under the applicable collective bargaining agreements. Even if the companies are not bound by collective bargaining agreements, they are obliged to consult with any trade unions of which any concerned employees may be members. Union consultations must be initiated and concluded before a decision regarding the transfer is made. If the consultation requirement is not observed, the breaching company may be obliged to pay damages to the unions concerned.
Requirements for Predecessor and Successor Parties
The transferring company will remain liable (jointly with the acquiring company) towards the transferred employees for liabilities relating to the time prior to the transfer. However, the parties to a business transfer agreement are free to agree on a different distribution of liability between them.